This was first published in The Business Times on 23 February 2021
Sharad Somani, Head of Infrastructure Advisory, KPMG in Singapore
Cherine Fok, Director, Sustainability Services, KPMG in Singapore
The idea of ‘environmental sustainability’ is inextricably woven into the tapestry of Singapore’s development from a polluted island in the 1960s to one of the cleanest and greenest cities in the world.
Accelerating Singapore’s ascent as a Green Economy, Budget 2021 promises to take the lead in green bond issuances and as a catalyst, identifies public sector green projects worth S$19 billion that are ripe for such financing. Aptly titled ‘Emerging Stronger Together’, Budget 2021 intensifies the focus on climate change and technology adoption, setting aside an aggregate of S$90m to boost electric vehicle initiatives and local food production.
To foster resilience in this age of uncertainty, KPMG in Singapore proposes the 3R framework to Re-imagine strategic responses, Re-plan the workforce and business models, and Re-create the business and sustainability landscape to surge ahead. This is an opportune moment for the government to invest in physical and digital infrastructures to facilitate the transfer and access of reliable environmental data for decision making, such as carbon emissions, energy use and water consumption.
Consistent and coordinated efforts are required across the public sector, private sector and civil society, using a calibrated, phased approach to achieve large-scale environmental impact. It therefore becomes important for the government to address the exigencies of infrastructure development to enable green innovation and behaviours.
The pandemic provides a stark reminder of humanity’s delicate relationship with the planet in this era of seamless global interconnectivity. It exposes our global interdependencies and underlines the need for businesses to not only deliver social impact beyond financial returns, but also collectively prepare for the future.
Food is a vital interface between humankind and nature—one that reminds us of the massive disruptions we face. The S$60 million Agri-Food Cluster Transformation Fund will act as seed-capital for Singapore meet its ambitious 30-by-30 plan, whereby the country aims to produce 30 per cent of its nutritional needs locally by 2030. The fund will not only invest in technologies and solutions for food security, but also in nutritional needs in terms of sustainable food for healthy living. There is an opportunity here to promote urban farming to address the country’s food needs. With this objective, the government should also explore the possibility of enhancing the Land Intensification Allowance to provide tax relief for infrastructure costs incurred in urban farming while leveraging private capital in this initiative.
New measures in tax regimes and policies will help Singapore move up a gear in its journey towards a car-lite future. Budget 2021 incentivises environmentally friendly options through measures such as narrowing the cost differential between electric vehicles (EVs) and Internal Combustion Engine cars, as well as providing grants for green R&D. Vehicular exhaust emissions from transport are a major source of pollution, contributing about 50 per cent of the ambient PM2.5 level in the environment.
To ensure the proliferation of EVs, adequate charging infrastructure is a pre-requisite. The ambitious target of 60,000 chargers by 2030 can only be achieved if the right investments are made in building the charger ecosystem for EVs. Therefore, the government should carefully monitor the situation and if private capital is not forthcoming, the need might arise to enhance the S$30 million allocated for EV-related initiatives over the next five years.
Establishing standards, impact measurement frameworks and taxonomies to create a “common language” will be vital growth drivers for green trade and financing. Scaling efforts to introduce a carbon market with high quality carbon credits – those that have the greatest impact on the climate and social agendas – will be essential in defining a future-proof strategy that has the greatest carbon impact. Setting up structured platforms for active engagement with corporates and communities should help spur education, on-boarding and ownership of green outcomes, while structuring educational and skills uplift programmes will build capabilities within sectors and workforce. Earmarking S$19 billion worth of projects for green capital and setting up a vibrant liquid carbon market could help further strengthen Singapore’s credentials as a green financing hub for the region.
In the new reality shaped by the pandemic, we are seeing environmental, social and governance (ESG) playing a bigger role in driving the continued success and resilience of businesses across the world. Business leaders are putting aside the relentless pursuit of growth to spend more time re-examining the purpose of their businesses, with 72 per cent surveyed in KPMG in Singapore’s 2020 CEO Outlook COVID-19 Special Edition saying that their response to the pandemic has caused a shift in focus towards the social component of ESG.
Resting on the principle of investing for the future, Budget 2021 provides a well-thought-out roadmap to enable Singapore’s continued competitiveness and social cohesion, with extensive engagement and partnership opportunities across communities and the private sector.